According to Jim Boscov, CEO of Boscov’s based in Reading, the department reached out to the retailer to see if they would like to postpone payment due to the current economic climate related to COVID-19.
The payment is approximately $ 2.5 million, according to Boscov, and the loan remains at $ 21.8 million.
“We’ve been paying for it continuously for the past 10 years,” said Boscov.
The retailer has been closed since March when Governor Tom Wolf ordered the closure of all non-life support stores.
Boscov said they were happy with the offer and would continue to pay the interest.
Boscov’s went into Chapter 11 bankruptcy in 2008, closing 10 stores, including one in Harrisburg Mall in Swatara Township. The Boscov family bought their fortune from bankruptcy court in 2008 for $ 300 million, including the HUD money, combined with $ 200 million in bank financing and $ 60 million in family savings.
Section 108 of the HUD Community Development Block Grant program provides communities with a source of funding for economic development, housing refurbishment, public facilities, and large-scale physical development projects.
Six Pennsylvania counties – Lebanon, Schuylkill, Lackawanna, Blair, Cambria, and Butler – agreed to guarantee their block grant money to secure the loan in 2009.
Boscov said that Gov. Ed Rendell guaranteed that in the event of Boscov defaulting, the state would make the payments and the municipalities would not have to worry about the payments.
At the time, Lebanon’s district commissioners received a letter from the state guaranteeing not only that the state will repay the loan, but also where the money would come from if, according to footage from Lebanon district, Boscov did not default on the loan Commissioners meeting on February 26, 2009 Meeting provided by Jo Ellen Litz, District Commissioner of Lebanon. The commissioners at that meeting approved the state block grant funds for community development. Litz, who has been the district commissioner since 1995, said on Friday that Lebanon’s district commissioners had not been contacted regarding the postponement.
Boscov said the loan allowed the company to get out of bankruptcy.
“Since then, we’ve paid on time and in full every time,” he said.
Boscov said the one payment will be added to the end of the loan. He said the ability to defer that payment was enormous and extremely helpful in getting through this time that has been difficult for retailers.
The past week has been a difficult one for some large chains. Neiman Marcus, J. Crew, and Gold’s Gym have all filed for Chapter 11 bankruptcy.
Boscov’s will reopen its first two stores in the state on Sunday. The two stores are located at 5800 Peach St. in Millcreek Township, Erie County and at 1 Susquehanna Valley Mall in Monroe Township, Snyder County.
Boscov’s stores in Lower Paxton Township, Camp Hill and North Lebanon Township are in the “red phase” of the state and will remain closed. The company has 26 stores in Pennsylvania and 24 states combined in seven other states, according to the company’s website.
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